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By 
March 10, 2023 at 04:10 PM
Compensation is a key motivation for many workers to change jobs, and broker-dealer reps are no exception. According to The Cerulli Report—U.S. Advisor Metrics 2022: Trends in Advisor Compensation released this week, 45% of those who switched broker-dealers in the past three years cited either the amount or the structure of compensation as a key reason they joined a new firm.
Overall, 7 in 10 broker-dealer advisors say they are satisfied with their current compensation structures, according to the report, but those working in the wirehouse channel may be more likely to consider seeking greener pastures than their counterparts. Twenty-four percent of advisors working for a wirehouse firm expressed displeasure with their compensation structures, compared with 5% of advisors at national and regional firms and 7% of independent broker-dealers.
Cerulli found that many firms, particularly wirehouses, consistently revise their compensation plans in order to achieve corporate-level initiatives and increase advisor productivity. These changes may benefit the firm, but advisors can find them hard to navigate, especially if changes are frequent.
Sixty-two percent of wirehouse advisors surveyed said their compensation plans have become too complex, and 47% complained that their firm modifies its compensation structure too often.
According to Cerulli, these changes can also be off-putting to advisors in certain segments, based on their tenure, core client market or specialties. Targeted compensation strategies can increase advisor retention and productivity if practices are motivated to achieve the highest payouts. But this approach can backfire if advisors find the thresholds unrealistic or unattainable, and compensation is a chief motivator for advisors who switch firms.
